be scared of pensions
is no doubt that the image and reputation of the pensions system in this
country have taken a bit of a bashing over the last year or so.
as we do, directly with the public we in the Pensions Advisory Service (OPAS)
have first hand knowledge of many of the problems that are concerning
consumers and how they are reacting to them.
is our perception that confidence both in the system and in the people
that run it is at an all time low and a number of things need to be done
to restore confidence levels before it is too late.
problem has its origins in several factors but can be attributed in part
at least to the many very high profile "disaster" cases reported
in the media, involving final salary schemes, where workers and former
workers have lost their pensions following the insolvency of the company -
sometimes after contributing into a final salary scheme for 20 or 30
is both shocking and distressing for the people concerned but the sort of
publicity these situations generate has also brought home to a wider
audience how little protection has existed in what had traditionally been
viewed as the gold standard of pension schemes.
and the other factors at play (such as three years of tumbling stock
market returns) have undoubtedly put many people off pensions generally
and have made them think twice about starting or even continuing a pension
plan of any type.
"putting away money under the bed" alternative is frequently
referred to as a better prospect! This is an appalling state of affairs
which surely cannot be allowed to continue.
government has recently come forward with proposals to improve member
protection in the event of company insolvency and has imposed a
requirement on solvent employers who wind-up their schemes to meet the
pension promise in full.
are welcome changes although of course for some (the people who have
already lost their pensions) they are too little too late.
are also plans (long overdue) to simplify the pensions legislative
framework and the detailed rules, in order to improve consumer education
and provide better information and advice.
by these measures it is possible to reverse some of the recent trends,
provide a more customer-friendly system and fully restore consumer
confidence remains to be seen.
in the longer term the situation remains that as a country we are unlikely
to be saving anything like enough for our old age.
an ageing population this will inevitably mean that the pressures on the
public purse will increase and the state pension will not keep pace with
alternative means of support, future generations of pensioners will have
an impoverished old age and indeed may be forced (if they are able) to
work on beyond what is the present state pension age of 65.
reality, therefore, is that today's workers will either have to be
persuaded or compelled to provide more for themselves in later life.
have a feeling that, much as I dislike the idea in principle, compulsion
will be found to be the only practical solution.
a voluntary system to work, everybody should be encouraged to develop
their own personal retirement plan - and the sooner they start the better.
ideal plan is to do a bit of everything - a pensions plan, a savings plan
and property, although not everyone can afford that.
workplace pension, a pension which is supported by an employer, is still
generally the best way of saving for old age.
is because an individual's own contributions will be topped up with extra
payments from the employer. If you have an opportunity to join such a
scheme, this is not something you should set aside lightly. It might be
the best thing you could do.
people should look at pensions as they would any other type of investment.
there have a number of disaster stories, with workers losing great chunks
of their pensions, the vast majority of people probably have nothing to
the government's new proposed compensation scheme should provide greater
security than has existed to date.
people must be proactive. They are investing for the long-term and it is
important to take an interest.
message - don't join a pension scheme and forget about it. Ask questions
about how the scheme is doing and how healthy it is on a regular basis.
Find out as much as you can: don't just sign up and leave it.
it is your future well-being that is at stake. There might be thirty or
forty years of living to do after work has finished. A bit of planning and
saving now will be appreciated later on.
runs a helpline to help members of the public with their pension queries.
The helpline can be reached, by dialling 0845 6012923. Calls are charged
at local rate. The views expressed are solely those of Malcolm McLean's
and not the BBC's. Any guidance is for general information only and does
not constitute financial or legal advice.